Estimating the effect of hypoxia on economic rents from the brown shrimp fishery in the Gulf of Mexico

The overall goal of this analysis is to quantify the effect of hypoxia on economic outcomes of interest, including catch, revenue, catch per unit effort (CPUE) and revenue per unit effort (RPUE) for the brown shrimp fishery in the Gulf of Mexico using spatially explicit data. To isolate the effect of hypoxia on fishing outcomes from confounding factors, we use spatial and temporal variation of hypoxia and take advantage of additional variation: the presence of areas with little to no hypoxia close to areas greatly affected by hypoxia. We employ a differences-in-differences-in-differences (DIDID) estimator, controlling for potential cofounders, including the brown shrimp life and growth cycle and state policies, to isolate the true treatment effect. We find that seasonal hypoxia has a positive, statistically significant effect on catch, revenue, CPUE and RPUE. Estimates of this effect on catch and revenue range from a 62% - 86% increase for seasonal hypoxia and a 63% - 73% increase for persistent hypoxia. For CPUE and RPUE, estimates of this effect range from a 32% - 39% increase for seasonal hypoxia and a 36% - 47% increase for persistent hypoxia. However, when we regress catch of different “classes,” or sizes, of shrimp, our results indicate that landings of large shrimp decrease in the presence of persistent and seasonal hypoxia whereas landings of small shrimp increase significantly. These findings corroborate studies of the effect of hypoxia on shrimp at the organism and population levels, and the estimated effects are consistent for multiple variants of a basic regression model.